Modern forms of European racism began to acquire their characteristic style and content in the 18th and 19th century. Britain and France had consolidated their empires on the platform of the transatlantic slave trade, and the ideology of race offered a handy justification. The thrust of Enlightenment ideas, however, also demanded a "scientific" basis for beliefs about race. Throughout two centuries of slavery and empire European thinkers and scientists set out to furnish their societies with a rational background for their treatment of other races. Set against this background, Kunal Basu's Racists is a cool dissection of the roots of European racism. The novel is also a cutting satire about the "scientific" attitudes which buttressed racist beliefs, and which are still a recognisable feature of current academic behaviour.

The racists of the title are the novel's protagonists: the English scientist, Bates, and his French counterpart, Belavoix. Halfway through the 19th century, the two men are stars of the new discipline of "racial science", centred round pre-Darwinian attempts to explain variations in the human species. Bates, the hope of English liberal philanthropy, believes that all races belong to the same human family. Differences such as the superiority of the white race can be explained by a painstaking study of the size and proportion of skulls, and his craniology laboratory houses a huge collection, presided over by his assistant, Quartley. Bates's lectures deliver a clear explanation of these differences - "The savage and the civilised were separated by nature where it mattered most: in the brain. Like Aristotle's scala naturae, Bates's Chain of Races charted the entire human species, based on the cranial features of all the races. At the top of the chain stood the European, the very best, while the bottom was reserved for the Negro: 'A man he is, like us, but a lesser man!' he'd announce to general applause."

Belavoix, on the other hand, bases his speculations on his travels and observations of life in the African colonies. He believes that the races represent human species, which are as different as a horse and a zebra, and which are destined to dominate, enslave and murder each other.

The two men set out to settle the argument by means of a unique experiment. They propose to isolate two babies, a black boy and a white girl, on an uninhabited island, for a period of 12 years. The children will be cared for by a mute nurse with strict instructions not to intervene in their development. They will be reared without language, without games, and completely outside conventional frameworks of morality or culture. Bates expects the white girl to exert her racial dominance over the black boy; Belavoix, on the other hand, expects the relationship to end in racist murder. By the end of the experiment, they believe, the children will have furnished definitive proof about the superiority of French or English science.

The project begins promisingly; the scientists visit twice a year, and Bates's craniometer records the expected development in the children's skulls. After six years, however, the prospect has changed radically. It gradually becomes apparent that Bates's measurements are pointless, and the two scientists spend their time quarrelling over methodology. The children's behaviour is inconclusive, and the nurse, Norah, has become their surrogate mother. Quartley falls in love with her and they begin to plot their escape.

Back in England, Bates's liberal backers begin to worry about the welfare of the children. His academic superiors express doubts about the scientific validity of the experiment, and the publication of Darwin's theories provokes an immediate exposure of the project's fallacies. Finally, the intervention of the outside world brings the experiment to a brutal and predictable end.

The relationship between the two scientists is at the heart of the novel. Bates is practically devoid of human sympathy, describing the children as "samples". Belavoix's parallel obsession with his theories leads him to plot the murder of one of the children. Basu's skill is to make both men recognisable portraits from present-day academic life, while locating them firmly in their time. As the novel develops it also becomes clear that the title describes the entire landscape of 19th-century life. Questioned by his backers about the suffering that the children may be undergoing, Bates is stung into a reply which returns responsibility for his cruelty to the society which has nurtured him. "You wanted proof of God's will, didn't you?"

Running in parallel with the story of the experiment is the relationship between the two working-class characters, Norah and Quartley. Their role is a reflection of the hierarchy of racial superiority. Relentlessly bullied and abused by their boss, Bates, they also know that the project offers them a rare prospect of escape from poverty and oppression.

Racists is a panorama of 19th-century ideas about race, but it is also a sly, penetrating commentary on their contemporary survival, highlighting the cross-fertilisation between social science, politics and philanthropy. Taut, elegant and intelligent, this is one of the most interesting novels so far to chart the history and content of European racism.

· Mike Phillips's London Crossings: A Biography of Black Britain is published by Continuum